How Much Term Life Insurance Coverage Do you Need?
If you have seriously thought about buying a term life insurance policy, then you are on the path toward protecting your family, in the event of your passing away. The problem that now another question may be gnawing at you. How much life insurance should you get?
As a rule of thumb, some life insurance financial advisors will tell you to multiply your actual income by seven. But still other advisors tell you to only buy a term life insurance policy to replace your current income, and others will tell you, that you only need enough insurance to cover you debts. Now which do you think is the real truth?
Every Term Life Insurance Policy is Different to Meet Different Needs
The truth is that everyone is different, so before you head out the door looking for that term life insurance quote, you need to analyze your personal situation and determine which is the best policy for you. So, getting the right term life insurance policy means you need to really sit down and do your finances. You need to think about the amount of money your loved ones will need to continue with their current life style. You should also think about future college cost, etc. The following method will help you determine the real amount of term life insurance coverage you will need.
Determine Short Term Life Insurance Needs
First you should determine what your family’s short term needs will be. This means determine what the final expenses, the outstanding debt and what the emergency expenses will be. You need to figure out the amount that should be covered for attorney fees, court costs, and taxes.
Determine Long Term Life insurance Needs
Next you need to cover your long term debt. By this we are talking about mortgage costs, college tuition etc. You can use college projection costs to determine the cost of college tuition. It is estimated that the cost of college rises by about 5% every year.
Every Day Needs
Then you need to determine what the family maintenance cost is going to be. This includes food, clothes, utilities, transportation and entertainment.
Think About Your Resources before Ordering Term Life Insurance
Once you have all of the numbers that tell you what income you need, then you have to figure out what your existing resources are. This means add up your savings, scotch, social security benefits, etc.
Realistic Term Life Insurance Coverage
To get a true estimate of what type of term life insurance coverage you want, you will need to subtract your resources from the needed income. This is the amount of coverage you really need. This way you don’t have to buy a term life insurance policy that is too large and you don’t get stuck with “too little” coverage either.
Once you have determined your needs, then you are ready to shop around and get different term life insurance quotes. The amount you pay will be adequate for the amount of term life insurance you buy.
As a rule of thumb, some life insurance financial advisors will tell you to multiply your actual income by seven. But still other advisors tell you to only buy a term life insurance policy to replace your current income, and others will tell you, that you only need enough insurance to cover you debts. Now which do you think is the real truth?
Every Term Life Insurance Policy is Different to Meet Different Needs
The truth is that everyone is different, so before you head out the door looking for that term life insurance quote, you need to analyze your personal situation and determine which is the best policy for you. So, getting the right term life insurance policy means you need to really sit down and do your finances. You need to think about the amount of money your loved ones will need to continue with their current life style. You should also think about future college cost, etc. The following method will help you determine the real amount of term life insurance coverage you will need.
Determine Short Term Life Insurance Needs
First you should determine what your family’s short term needs will be. This means determine what the final expenses, the outstanding debt and what the emergency expenses will be. You need to figure out the amount that should be covered for attorney fees, court costs, and taxes.
Determine Long Term Life insurance Needs
Next you need to cover your long term debt. By this we are talking about mortgage costs, college tuition etc. You can use college projection costs to determine the cost of college tuition. It is estimated that the cost of college rises by about 5% every year.
Every Day Needs
Then you need to determine what the family maintenance cost is going to be. This includes food, clothes, utilities, transportation and entertainment.
Think About Your Resources before Ordering Term Life Insurance
Once you have all of the numbers that tell you what income you need, then you have to figure out what your existing resources are. This means add up your savings, scotch, social security benefits, etc.
Realistic Term Life Insurance Coverage
To get a true estimate of what type of term life insurance coverage you want, you will need to subtract your resources from the needed income. This is the amount of coverage you really need. This way you don’t have to buy a term life insurance policy that is too large and you don’t get stuck with “too little” coverage either.
Once you have determined your needs, then you are ready to shop around and get different term life insurance quotes. The amount you pay will be adequate for the amount of term life insurance you buy.
posted by Ivon T. Hughes at 11:13 AM
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